E-Billing and other transformational projects announced for UAE

The Ministry of Finance (MoF) has announced five strategic transformational projects to support national priorities and enhance government financial work. Aligned with the 'We the UAE 2031' vision and the UAE Digital Government Strategy, these projects aim to strengthen the country's position as a leading digital government.

The projects include:

1. "Promising Future in the Supply Strategy of the Federal Government," which aims to expand and diversify the supplier base, improve service quality, and stimulate the local economy.

2. "Enhancing Competitiveness and Transparency in Data Related to Climate and Environment Spending," focusing on providing data to the International Monetary Fund and promoting sustainability efforts.

3. "The Future Phase of Regulating Public-Private Partnerships," aiming to establish effective partnerships between sectors for sustainable economic development.

4. "Imposing a Federal Tax on Corporations and Businesses," implementing corporate tax policies and regulations.

5. "E-Billing System" to develop an advanced electronic billing system for tax returns and improve tax compliance.

The Ministry seeks to achieve comprehensive strategic goals, promote leading roles in key sectors, and ensure a sustainable future for the UAE. These projects reflect the government's commitment to adapt to an ever-changing world and meet future requirements.

FTA begins accepting requests for refunding input tax incurred on operating mosques

The Federal Tax Authority (FTA) now accepts VAT refund requests for operating mosques through the EmaraTax digital tax services platform. The Cabinet Decision on Refund of Input Tax Incurred on the Construction and Operation of Mosques, along with the Ministerial Decision, are in effect and applicable to all mosques in the UAE.

To request a refund, the mosque operators must adhere to specific deadlines based on the mosque's operation commencement date. The refund periods are from April to September 2023 for mosques operating before January 2022, covering 2018 to 2022, and from October to December 2023 for mosques operating on or after January 2022, covering 2022.

The FTA Director General, H.E. Khalid Ali Al Bustani, emphasizes the simple refund process outlined on the FTA website and urges stakeholders to review the Cabinet and Ministerial Decisions, along with the guide for eligibility and required documents.

Eligibility conditions for the refund include the mosque being registered as a mosque with the competent authority and the operator holding valid written permission to operate the mosque. The refund must be related to mosque operations and not commercial facilities.

The required documents for the refund application include Emirates ID or passport copies, bank account certificates, a chart of operating expenses, and copies of the five highest tax invoices.

FTA stresses the need for accurate emirate-specific VAT reporting in relation to e-Commerce

Abu Dhabi, UAE - The Federal Tax Authority (FTA) urges taxpayers to comply with accurate, emirate-specific Value Added Tax (VAT) reporting for e-commerce. Recent updates to UAE VAT legislation introduce new reporting obligations for certain businesses in their VAT returns. Starting from 1st July 2023, "qualifying registrants" must report e-commerce supplies in box 1 of their VAT Return, based on the customer's emirate. It's crucial for businesses to review the legislation and FTA clarifications before their VAT return submission to avoid mistakes and potential penalties. The FTA's "EmaraTax" system will assist taxpayers by confirming if they fall under the new e-commerce reporting requirement, ensuring correct VAT reporting.

UAE Corporate Tax Cabinet Decision 75 on Administrative Penalties for Violations

The UAE Ministry of Finance has issued Cabinet Decision No. (75) of 2023, outlining administrative penalties for violations related to the Corporate Tax Law, effective from 1st August 2023. The penalties are designed to ensure compliance with the new regulations without burdening compliant businesses. Taxable individuals or entities failing to fulfill obligations under the Corporate Tax Law will face penalties for late filing and payment, failure to inform the Federal Tax Authority of necessary amendments, and non-compliance with record-keeping requirements. The Ministry emphasises the importance of tax compliance in promoting sustainable economic growth in the UAE and aligning with global standards.

UAE Corporate Cabinet Tax Decision 74 on Tax Procedures

The UAE Ministry of Finance has issued Cabinet Decision No. (74) of 2023, replacing the existing Executive Regulation on Tax Procedures with the New Tax Procedures Law. This update aligns definitions, procedures, and processes with the new law, which came into force on 1st March 2023. With the recent introduction of Corporate Tax in the UAE, it's vital to provide Taxable Persons with the necessary guidance for ongoing compliance.

The Cabinet Decision outlines requirements for accounting records and commercial books, conditions for registering as a Tax Agent, procedures for de-listing a Tax Agent, reconciliation in Tax Evasion crimes, tax payment, refund procedures, and trustee obligations in bankruptcy cases.

Effective from 1st August 2023, this decision ensures clarity and consistency in the UAE Tax system. Clause (2) of Article (12), regarding conditions for juridical persons in the Register of Tax Agents, will be effective from 1st December 2023.

UAE Corporate Cabinet Tax Decision 81 on Conditions for Qualifying Investment Funds

The UAE Ministry of Finance (MoF) has issued Cabinet Decision No. (81) of 2023, introducing additional conditions for Qualifying Investment Funds under the Corporate Tax Law. Investment funds must meet these conditions to be exempt from Corporate Tax, ensuring the integrity of the tax system while enhancing the UAE's competitiveness as an investment hub.

The decision outlines criteria for investment funds, excluding Real Estate Investment Trusts (REITs), including primarily engaging in investment activities, limited ancillary activities, ownership interests, investment manager oversight, and control of day-to-day management.

For flexibility, ownership criteria for investment funds other than REITs are non-binding for the first two financial years, subject to diversification plans after that period.

REITs must meet requirements related to real estate asset value, share capital listing, and average real estate asset percentage to be exempt from Corporate Tax.

The new Cabinet Decision aims to maintain the UAE's investment hub status while upholding the Corporate Tax system's credibility. Full details on the Corporate Tax Law can be found at https://mof.gov.ae/tax-legislation/.

UAE holds second round of talks with Russia for double tax avoidance

The UAE and Russia have held a second round of negotiations to establish an agreement to prevent double taxation, aiming to enhance friendly relations. The Ministry of Finance emphasised cooperation in critical sectors and the significance of ongoing coordination and constructive dialogue with Russia. The meetings discussed partnership efforts to boost cooperation, growth, and development in areas of mutual interest.

The UAE's new corporate tax, effective from June 1st, will tax non-residents on property income. Double taxation avoidance agreements serve to prevent tax duplication for businesses and individuals operating between the two countries, promoting development goals, diversifying income sources, preventing tax evasion, and addressing cross-border trade and investment challenges.

Amid the Ukraine war, an influx of Russian citizens has been observed leaving their home country, with Dubai experiencing increased one-way flights and notable property investments. Though Russian investors contribute to property sales, they are not the sole driving force behind the market.

FTA signs Government services quality charter

The Federal Tax Authority (FTA) in the UAE has signed the Government Services Quality Charter to enhance public service standards. This initiative aims to provide advanced and efficient services, ensuring a seamless experience for users. The Charter focuses on upgrading services to meet global standards and best practices.

The FTA will develop three transformation pathways, including the 'Maskan' smart application for Tax Refunds, streamlining processes and going paperless. The second pathway involves issuing Tax Residency Certificates more efficiently. The third pathway introduces an instant messaging and live chat service for better user support and information access.

By adopting the Government Services Quality Charter, the FTA aligns with the UAE Government's commitment to innovative and proactive solutions, enhancing government services and improving user experience for a better future. The government aims to provide comprehensive and integrated services tailored to user needs and preferences, promoting flexibility and knowledge sharing among various entities.

July’s Business Takeaway UAE

The new corporate tax levy, which came into effect on June 1, reflects the country’s effort to align itself with new international standards, particularly the move toward a global minimum tax on multinational corporations that was endorsed by the Group of 20 nations in 2021 and continues to gain momentum. Based on current Emirate-level taxation structures, UAE imposes a 55%+ income tax on oil, gas, and petrochemical concessions, 20% on foreign bank branches, and typically no or 0% tax on most other entities.

Effective from new financial years starting June 1, 2023, the Federal UAE CT Law (signed October 2022) will implement a 9% corporate tax rate on income exceeding AED 375,000 annually. Qualifying freezone entities will have 0% CT on qualifying income and 9% on non-qualifying income. Non-resident entities lacking a UAE PE are likely to face 0% WHT on UAE-sourced income.

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